The volume of one year adjustable rate mortgage (ARM) bonds is set to fall again when Danish mortgage credit institutions hold their latest quarterly refinancing sales later this month, with Nykredit today (Thursday) having announced a sharp reduction in its auctions of such bonds. [Amended to reflect lower total below.]

Nykredit Realkredit, Denmark’s biggest mortgage lender, became the first of the Danish issuers to announce details of its sales today, disclosing that it will auction a total of Dkr73bn (Eu9.8bn) of ARM and floating rate bonds from 17-28 August, of which Dkr66bn will be denominated in kroner and Dkr7bn equivalent in euros.

Dkr40.7bn of Nykredit’s auctions will be of one year ARMs, down from some Dkr66bn [corrected from Dkr75bn] in the corresponding sales last year, reflecting the wider trend away from the one year ARMs in Denmark. This has been driven by regulatory and rating agency pressures, with Danish lenders incentivising borrowers to move into other products.

“Some borrowers have chosen to move out of these ARMs into floating, Cita-linked bonds,” said Lars Mossing Madsen, chief dealer at Nykredit, “and some have chosen to go into 30 year mortgage bonds. So there is still a movement out of the one years into three and five year ARRMs and to other longer dated products.

“The amount is more or less what we expected it to be.”

Dkr7bn of Nykredit’s sales over the 10 days will be of Cita and Euribor-linked paper, while two, three, four and five year ARM bonds will be auctioned alongside the one year ARM bonds.

Nordea Kredit is set to hold sales from 25-27 August and DLR Kredit at the beginning of September, with BRFkredit also set to participate in the latest round of sales.